The online mortgage broker

Infographic: How much interest-only home loans are costing property investors in 2017


Some facts about property investors and interest-only loans

Here’s how interest-only loans stack up against principal and interest loans for property investors in 2017.

  • According to ASIC, up to 70% of property investors use interest-only loans
  • Interest-only borrowings in Australia rose from $88.7 Billion in 2012 to $153.8 Billion in 2015
  • In 2017, lenders have increased interest-only loan rates by up to 0.7% p.a. compared with principal and interest rates. Current interest rates can typically be 4.3% p.a. for an interest-only loan, but only 3.9% p.a. for a principal and interest loan – whereas at the start of 2017, the interest rate for the two loan types approximately equal.
  • Assuming an example situation involving a $544,000 home loan over a 30 year term for an investment property worth $680,000, and assuming the owner has a personal gross income of $118,000 a year and $300 a week rental income..
    – An interest-only loan would yield a higher annual tax benefit ($3,039 versus $2,123), and lower monthly mortgage payments ($1,949 versus $2566)
    – But, after one year, a principal and interest loan would pay off a whopping $9,748 of the principal – which nets out as principal and interest being the better option to the tune of $3,778 in the first year alone.

How much interest-only home loans are costing property investors in 2017

 

Share this infographic on your own website by copying and pasting the code below:

 

To find out whether you’d be better off choosing an interest-only loan, use our calculator right here:

And if you want to take it one step further than the calculator, you can live chat with a mortgage adviser here.

Add a Comment

Helen is Head of Content at uno - the smarter, faster way to get a better home loan.

Blog

You might also be interested in

Understanding the First Home Buyer Scheme

It takes the average household nine years to save a 20% deposit for their first home, making this one of the biggest barriers to homeownership. We explore the recently announced First Home Loan Deposit Scheme and how it can see you moving into your first home faster. Getting on the first rung of the property

Royal Commission wrap: it’s time to rethink the customer experience

A changing industry presents opportunities to review the way brokers deliver ongoing value to customers, says uno Home Loans CEO Anthony Justice.

The first RBA rate decision of 2019 and what it means for you

The result has now stayed the same since mid-2016, but speculation is mounting that the RBA will make its big move later this year. The hotly debated question is whether the next move will be a cut or an increase.

Search.
Compare.
Settle.
Strut.

Get started

Find out if your home loan is any good

Get your loanScore